Some Danish colleagues told me recently that the Danish Parliament on 30 May last unanimously passed a resolution requiring the Danish government to propose a strategy for how it would actively work for the elimination of EU agricultural support. The strategy should include a timeframe and plan of activities which should take into account the planned CAP Health Check in 2008 and the review of the EU budget in 2009. The strategy should be presented to Parliament before the end of 2007.
A report on the UK’s Channel 4 News looks at likely increases in the prices of meat in the UK and elsewhere, as a result of increases in world cereals prices. A subject that has been discussed for several months here on CAP Health Check has entered the mainstream. View the report below the fold, including a short clip of me explaining the impact of changing diets in China. See also a feature story in The Guardian, drawing on neo-Malthusian Lester Brown’s latest book ‘Who will feed China?’
European agriculture should face the same ‘user pays’ principle as other EU consumers of water in the coming year in order to address the growing problem of water scarcity, according to a Commission Communication. The report by the Environment DG recognises that at least 20 per cent and maybe 40 per cent of water is wasted in the EU.
In the six months since it was launched, the CAP Health Check blog has established itself as the best place on the web for news, views and debate on the future of European food, farming and rural policy. We are now looking to expand our team with new voices and have secured funding from the William and Flora Hewlett Foundation so that we can now pay bloggers a modest amount in recognition of their contribution to the debate on the future of the CAP.
The UK Farmers Guardian reports that Mrs Fischer Boel was forced to confirm that allowing an increase in milk production would be addressed as part of the Commission’s Health Check proposals expected in November after Germany raised concerns about rising retail prices. The Commission has a number of options, including an annual market-linked increase in quota, a reduction in superlevy, or the scrapping of restrictions on the transfer of quota between member states. A number of member states have already sought a quota increase. As I argued yesterday, increasing milk quota without at the same time sending a signal that current levels of dairy protection must be reduced by lowering support prices is likely to encourage farmers into an unsustainable increase in investment with considerable pain to follow when quotas are finally eliminated in 2015.
The Australian Bureau of Agricultural and Resource Economics (ABARE) has long been a consistent critic of the CAP. In its latest report The European Unionâ€™s Agricultural Policy: A Stocktake of Reforms it acknowledges the EUâ€™s reform efforts to date, but highlights areas where more needs to be done. Its main conclusion is that, while the EU has been changing the form of its agricultural support policies toward â€˜decoupledâ€™ payments, very little has been done to reduce the level of support. In particular, substantial support and protection have been retained through tariffs and tariff quotas, and member states have retained some ‘coupledâ€™ payments.
DG Agri published its annual Prospects for Agricultural Markets and Income in the EU for the period 2007 through 2014 at the end of July. In this post I discuss the Commissionâ€™s latest view on the outlook for the EU sugar market. The EUâ€™s sugar market reform agreed in November 2005 has been less than a thundering success in making progress towards its objective of reducing domestic production by 6 mio tonnes of white sugar annually. White sugar stocks remain high, and success in maintaining market balance through 2014 will depend on the quantity of imports realised under the EBA (Everything But Arms) scheme and the future take up of restructuring aid.
In a previous post, I discussed the significance of the current buoyant markets for dairy products for the likely success in pursuing further reform of the EU dairy regime. The insight that world market conditions may influence the trajectory of CAP reform can also be extended to other CAP regimes. Producers have not been as optimistic regarding long-run price trends for agricultural commodities for many years. Food demand prospects appear bright, driven by population growth and rising incomes in many emerging markets. Non-food demand, particularly for biofuels, is a further positive driver. Many believe that, after many false dawns, we really are on the cusp of reversing the long-run decline in real agricultural prices since the Second World War and entering a Malthusian world.
The dependence of Irish farm incomes on the Single Farm Payment and other direct payments was starkly revealed by the publication of the 2006 results of the annual National Farm Survey (NFS) this week. Fully 98% of Family Farm Income (FFI) on Irish farms in 2006 was derived from the Single Farm Payment and other direct payments; only 2% represented the return from the market, the lowest recorded since the Survey commenced. Market FFI per farm in 2006 was only €334. In 2004, 86% of Family Farm Income came from direct payments and subsidies, and 14% from the market place.